SPAN Margin

#1
Guys,
Regarding new rule from SEBI.
1.Will this lead to dry up of liquidity in option market
2.Discourage retailers in writing options
3.Can broker take a call on reporting the initial margin of client
4.Will they roll back this new rule.
5.Who calculates SPAN margin, exchange or brokers
6.Apart from PC-SPAN do we have any other calculator

Appreciate your answers, as always I have come back home after my cheese is moved.

-Talon
 

sumeetsj

Well-Known Member
#2
Guys,
Regarding new rule from SEBI.
1.Will this lead to dry up of liquidity in option market
2.Discourage retailers in writing options
3.Can broker take a call on reporting the initial margin of client
4.Will they roll back this new rule.
5.Who calculates SPAN margin, exchange or brokers
6.Apart from PC-SPAN do we have any other calculator

Appreciate your answers, as always I have come back home after my cheese is moved.

-Talon



trying to answer to your questions.. hope this helps:

1. Not much i feel,
2. Little bit
3. Yes, they are already doing that
4. SEBI rolling back this rule is out of question
5. Brokers, exchange specifies them with a "Formula"
6. There are many, u can google for them

SEBI is a watchdog, its their job to do such things..
Retailers trading in our country amounts to a fraction of the entire turnover,
so not much difference will be there.
Both SEBI and brokers know that to do and to get business in such
markets is tough.
SEBI will keep making rules and brokers will keep finding loopholes

 

sumeetsj

Well-Known Member
#4
You got my point right.
Brokerage business is driven highly by market/trader/crowd sentiments.
So a broker has to do/offer many things to its clients to get business.

(I have watched the industry very closely from many levels,
thats how i know all this)

 
#5
Guys,
Regarding new rule from SEBI.
1.Will this lead to dry up of liquidity in option market
2.Discourage retailers in writing options
3.Can broker take a call on reporting the initial margin of client
4.Will they roll back this new rule.
5.Who calculates SPAN margin, exchange or brokers
6.Apart from PC-SPAN do we have any other calculator

Appreciate your answers, as always I have come back home after my cheese is moved.

-Talon
Pardon my ignorance. Which Rule.
Rgds
 
#6
Pardon my ignorance. Which Rule.
Rgds
Market regulator the Securities and Exchange Board of India (Sebi) today asked stock exchanges to impose heavy penalty on brokers allowing their clients to trade in derivative market without sufficient margin money and said that fines could be as high as the shortfall of funds.

While the minimum penalty is 0.5% of the shortfall of margin money, the penalty could be as high as 100%, the Sebi said in a circular.

The stock exchanges will have to impose the penalties from September 1, the circular of Sebi said, adding, this is being done to protect investor interest and promote development of securities markets.

"In consultation with the BSE, MCX-SX, NSE and USE, it has been decided that stock exchanges shall levy penalty on trading members for short or non collection of margins from clients in equity and currency derivatives segments," it said.

The higher limit of exposure allowed by a broker to its clinet in the derivate market is the margin money.

According to the Sebi norms, clearing members and trading members are required to collect initial margins from all their clients and required to report on a daily basis details in respect of such margin amounts due and collected.

In derivative market if the price of a product declines, then the client comes under margin pressure.

"Sebi is ensuring that collection of margin money is synchorinsed with the trade and done without any time lag to avoid any systemic default," SMC Global Head Research Jagannadham Thunuguntla said.

The regulator said that if short/non-collection of margins for a client continues for more than three consecutive days, then penalty of 5% of the shortfall amount shall be levied for each day.

If it takes place for more than five days in a month, then penalty of 5% of the shortfall amount shall be levied for each day, during the month, it added.
 

sumeetsj

Well-Known Member
#7
Many brokers still giving limits for intraday trading in futures.
If you have to carry a futures position then at least the span margin is required.

This is what i have heard from my contacts.
 

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